Should the U.S. Remove Ethanol from the Gasoline Supply?

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In a move that will likely surprise many of those who follow American politics, a Democrat and a Republican have found an issue that they can both agree on and have introduced a bill together.

Sens. Dianne Feinstein and Pat Toomey introduced S.577 last week, which intends to modify the Renewable Fuel Standard to reduce the focus on corn ethanol in favor of other alternative fuel sources like biodiesel and cellulosic ethanol. This move comes following their failure to attach the legislation to the Keystone XL Pipeline Act earlier this year.

The Renewable Fuel Standard was created in 2005 and later amended in 2007, requiring that increasing amounts of renewable fuels be mixed in with the nation’s gasoline supply. Currently it sits at about 13 billion gallons per year, but by 2022, the requirement will be 36 billion gallons. While Feinstein and Toomey’s bill wouldn’t eliminate that standard, it would limit the use of corn ethanol.

“Our infrastructure has a ceiling for the amount of corn ethanol that can be used, and we’re rapidly approaching it. Companies are physically unable to blend more corn ethanol into gasoline without causing problems for many gas stations and older automobiles,” wrote Feinstein.

Currently, most gasoline is mixed with 10% ethanol, a mixture known as E10. In order to meet the requirement to use more ethanol, though, a move to 15% ethanol, or E15, has been approved. The challenge though is that ethanol is corrosive to rubber and certain metals, which has the potential to cause problems for cars that weren’t built with ethanol corrosion in mind. Automakers have changed the potentially affected components in vehicles since 2007, but many cars on the road are much older and could be damaged by E15 gasoline.

Source: Thinkstock

S.577 isn’t the first or the only bill introduced to make changes to the Renewable Fuel Standard. Several state and national level bills have been introduced in the past, either looking to move away from a focus on corn ethanol or to either limit or eliminate the requirement that ethanol be mixed into gasoline at all.

Ultimately, the differences in bills show that the debate over ethanol really breaks down into two separate debates: whether mixing ethanol into gasoline should be required and whether corn is the best source for producing ethanol.

The arguments in favor of adding and even increasing ethanol in gasoline mostly center around reducing emissions and reducing dependence on foreign oil. While there’s a lot of debate over when increasingly rare petroleum will become too expensive to justify using as an energy, most people understand that oil is a limited resource, and while the world’s economy is largely built on oil, it’s important to develop renewable alternative fuel sources early. Ethanol burns cleaner than gasoline, reducing the environmental impact of a car, and it’s easily renewable.

Ethanol is also a fuel that the U.S. can produce itself, which reduces dependence on foreign oil. Instability in the Middle East means that not only is the supply of oil widely variable, but there’s also no guarantee that control of that supply won’t change hands or be cut off as a political power play. While the price of gasoline is still widely variable, using more ethanol in the mix allows the U.S. to partially stabilize prices at the pump.

Source: Koenigsegg

Another benefit of ethanol is that it has a much higher octane rating than gasoline. For engines that can use it, that means that ethanol makes more power as it burns. Fuel for race cars has long used ethanol for added performance, and even consumer vehicles can take advantage of ethanol’s extra power.

The Swedish supercar manufacturer Koenigsegg, for example, produced the CCXR, a car that can run on gasoline but is also able to run on E85 and pure ethanol. The higher the percentage of ethanol that it’s running on, the more power the CCXR makes, with pure ethanol producing 1,000 horsepower. On more pedestrian cars, though, ethanol power offers the ability to get the same amount of power out of a smaller engine, helping to reduce weight and further reduce emissions.

One of the biggest objections to ethanol’s use as fuel though is that, compared to gasoline, a gallon of ethanol doesn’t contain near as much energy. In fact, it takes about 1.5 gallons of ethanol to produce the same amount of energy as a gallon of gas. For consumers, that means that fuel efficiency suffers. Compared to pure gasoline, a car running on E10 will typically get 3% to 4% worse gas mileage.

If ethanol were significantly cheaper than gasoline, that wouldn’t be a problem, but as of December, the wholesale, or rack, price of ethanol was $2.40 per gallon, while gasoline was $1.73 per gallon. When you account for the energy disadvantage of ethanol, that drives the cost up to $3.60 per gallon, more than double the price of gasoline. While prices on gasoline have been down lately, the cost of an energy-equivalent amount of ethanol has been greater than gasoline since at least 1982.

The difference in gasoline and ethanol prices means that consumers are paying more to drive the same distance, and adding more ethanol to the fuel supply will only increase that cost. In a sense, the ethanol mandate acts as an invisible tax on drivers, and changing from E10 to E15 increases that tax. Currently, it’s estimated that consumers incur at least $10 billion in additional fuel costs each year, which works out to nearly $50 per driver per year.

Source: Thinkstock

Whether the additional cost to drivers is worth the reduction in emissions and decreased dependence on foreign oil is a question that’s hotly debated. While many senators and representatives at both the state and federal levels are advocating for a repeal of the ethanol mandate, at least for now, the federal government doesn’t seem likely to waver. A Republican win in the 2016 presidential election might change the tide, but don’t expect a repeal of the ethanol mandate before then.

If the ethanol mandate is going to remain in place, figuring out the best way to produce the ethanol to use for biofuel is incredibly important. Currently, corn ethanol is the most popular option in the U.S., partly because it’s an incredibly common crop and partly because of the influence of the corn lobby. Corn is a highly subsidized crop, and finding more uses for it is important to the farmers who grow it.

While it hasn’t been very efficient to produce corn ethanol in the past, since 1980, production of corn has increased from 95 bushels per acre to 160 bushels. The production process has also gotten much more efficient, requiring less energy and producing nearly 50% more ethanol per bushel of corn. Like with many industries, an influx of additional funding leads to rapid innovation.

Even if corn ethanol production is efficient enough to justify its use as a biofuel, one of the most popular arguments against corn ethanol is that it reduces the food supply and drives up the price of the remaining corn, which makes sense on the surface. Why use your food source for energy when you could use it for food? The good news is that only a tiny amount of corn grown in the U.S. is food grade.

About 99% of what’s grown is indigestible and is used for different purposes like animal feed, food supplements, and ethanol production. Using non-food grade corn for ethanol keeps the impact on the food supply negligible.

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However, that doesn’t mean that corn ethanol is the perfect solution. Part of what the Feinstein bill encourages is expanded use of what’s known as cellulosic ethanol. Cellulosic ethanol is produced using the indigestible structural material in plants called cellulose instead of glucose to produce alcohol.

Not only does this have the benefit of not using foods for fuel, but it also lowers the need for farmable land to be used in ethanol production. Even grasses like sawgrass can be used to produce cellulosic ethanol, and those can be grown on land that wouldn’t normally be able to support crops. As demand for ethanol grows, being able to increase the supply without using more farm land will be incredibly important.

Additionally, ethanol produced using sugarcane is a popular alternative. Sugarcane is an extremely efficient source for ethanol, producing large amounts of fuel with a comparatively small energy input. But one of the challenges is that sugarcane grows best in tropical regions like Brazil. Using sugarcane to produce ethanol may be inexpensive, but if it’s grown in another country, the U.S. wouldn’t actually become more energy independent.

Instead, it would be transferring its energy dependence to a different source and a different country. In the short term, depending less on the Middle East for energy would likely be beneficial to the U.S., but depending on Brazil for sugarcane ethanol defeats the purpose of moving to energy sources that allow the U.S. to become more independent.

Ultimately, it’s likely that the U.S. will find itself using quite a number of sources for ethanol. Corn isn’t perfect, but it’s quickly becoming more efficient. Cellulosic ethanol provides a great alternative to using a food source for energy, but it will be years before production is at a high enough capacity to conceivably replace corn ethanol. There doesn’t necessarily have to be a single source, just like there doesn’t need to be a single alternative to oil as an energy source. Investing in a variety of alternatives reduces the pressure on any single source to meet every single need, and that’s a great thing.

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